Blackrock is the biggest money manager in the world. The company, which was established by Larry Fink in 1988, manages more than $6.8 trillion. It is closely followed by Vanguard, Charles Schwab, and JP Morgan.
This week, the company will be in the spotlight for two main reasons.
First, the obvious one is that the company will release its earnings on Tuesday. The company, which is valued at more than $67 billion is expected to have revenue of more than $3.69 billion and an earnings per share of $6.99.
In the past earnings, the company’s revenue and earnings disappointed. The revenue of $3.25 billion, which missed the consensus estimates by $47.5 million. The EPS of $6.41 missed the consensus estimates by 17 cents.
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The chart below shows the performance of the company’s stock this year.
In this week’s earnings release, traders will be paying close attention to the company’s assets under management.
In January, the company reported that its assets under management had declined below $6 trillion. The company managed to turn this and the AUM have increased to more than $6.7 trillion.
Therefore, traders will want to see whether the company is increasing its AUM. This will be important because interest rates are declining, which is a negative factor for a company that makes a lot of money in interest rates.
Further, traders will focus on the fees that it charges. The company generates some of its fees in management fees. In recent years, these fees have been declining. This is primarily because of new upstarts that are charging less money.
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Early this month, brokers like Charles Schwab and Fidelity announced that they were removing all the fees of executing their trades. This was in reaction to new startups like Robinhood that have removed fees for trades.
Will Blackrock invest in Citadel?
The second reason why traders will be focusing on Blackrock is a news that the company was considering making a large investment in Citadel.
Citadel is a large hedge fund that was founded by a 19-year old named Ken Griffin. The company today manages more than $32 billion. The company has also gotten into the business of trade executions. Today, it is one of the biggest high frequency traders in the United States. Every day, it executes trades worth billions of dollars.
According to WSJ, the company could be worth as much as $7 billion.
This will not be the first large investment by Blackrock: in 2009, the company acquired iShares from Barclays.
This transaction brought more than $2.9 trillion in assets to Blackrock. It also allowed Blackrock to enter the business of exchange traded funds. In the past, it has been said that selling the company was the worst decision by Barclays.
According to WSJ, acquiring or investing in Citadel would be a major investment to the company.
This year, the company completed the acquisition of eFront. eFront is a big end-to-end alternative investment software that is used by leading money managers. As such, traders will want to know whether Blackrock will continue to buy the company or not.
External Useful Resources
Citadel adds quant research head for convertible arbitrage team – Efinancial
Quarterly Results – Blackrock.com